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Be on guard for "hidden" property division fees

Most Massachusetts couples will spend the bulk of their divorce focused on negotiating the division of marital assets. This is an understandable approach, and the outcome of property division will have an impact on both parties for many years to come. What many spouses fail to realize, however, is that there are a number of "hidden" expenses that come with various property division choices. Avoiding those costs can make a world of difference in the bottom line.

One fee that is often overlooked is tied to the preparation of a qualified domestic relations order, or QDRO. This is a document that outlines how the assets held in a 401(k) account are to be distributed after a divorce. Some plan administrators do not charge a fee for preparing the QDRO. Others, however, tack on anywhere from $300 to $1,200 for document prep.

Some spouses are not even made aware of these fees until after the divorce is complete. That can leave one party feeling as though he or she was taken advantage of, and that the full value of the asset will not be made available. Litigation over these and other fees for financial services is possible, but not a practical option for most families.

The best way to address this issue is to contact the 401(k) plan administrator early in the divorce process to determine if there will be any fees associated with dividing the asset during divorce. If so, those costs can be factored into property division negotiations. When there are not enough funds held in the account to justify a high fee, some Massachusetts spouses will simply leave the account intact, choosing to cede a greater share of other assets to the other party.

Source: bloomberg.com, "The Divorce Penalty: This 401(k) Fee Can Add Insult to Injury", Suzanne Woolley, Jan. 23, 2017

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